Conspiracy theories abound as Solomon Lew stalls DJs takeover

It's one of those blink-and-you'll-miss it buildings that commonly hugs the Victorian era streetscapes of South Melbourne, a one-part grungy, two-parts hip, area of Melbourne that is populated by car smash repair shops, cafes, naturopath suites and bordellos.

At No. 35 Market Street, almost in the shade of the West Gate Freeway and its constant noisy passing parade of trucks and cars, is a simple grey office building that has found itself at the centre of an international $2.2 billion battle for the future of Australia's oldest department store, David Jones.

The office is the registered address of a nursery of private companies owned by rag-trade billionaire Solomon Lew and which are now sitting on more than 53 million David Jones shares worth $200 million.

It's atop this pile of stock - representing 9.89 per cent of David Jones issued capital - that Mr Lew is threatening to upend the entire Woolworths Holdings takeover of the upmarket David Jones. And this week the retail mogul and BRW rich-lister already claimed a major victory by forcing a scheme meeting to vote on the bid to be moved back by two weeks.

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All this without saying a word. Nothing. No press conferences, lobbying or public acts of bravado. Simply the presence of Mr Lew, who is worth an estimated $1.7 billion, on the David Jones share register was seemingly enough for David Jones to blink, and push its meeting from June 30 to July 14.

The South African retail giant Woolworths had no option but to agree with the delay. Still Mr Lew remains silent.

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Given its humble edifice you wouldn't think the small accounting firm of chartered accountants and tax lawyers Daniel Allison & Associates in Market Street could be such a focus of corporate intrigue, mystery and open takeover warfare that now stretches from Sydney to Cape Town.

But next door to a chic cafe and a short walk to the appropriately named Boardroom brothel - which a court was told two years ago allegedly counted disgraced federal politician Craig Thomson as a client - is the Lew family's trusted Mr Allison and the Lew companies that are now openly stalking David Jones.

South African investors are as perplexed as those in Australia, and all the market can do is watch and hope that one day soon, preferably before the July 14 scheme meeting, Mr Lew will come out and state his intentions.

In the vacuum that now exists, the only thing that can fill it is conspiracy theories. The theories are as wild and scattered as those linked to the assassination of JFK. The key suspect remains Country Road, a small publicly listed fashion chain that counts two major shareholders, Mr Lew and Woolworths.

Stranded on a minority stake worth around $160 million for nearly 20 years, Mr Lew is scheming to force Woolworths to buy him out. He wants to be bought out at an inflated price of course, so the theory goes, just to rub salt in the wounds of Woolworths, or just because he can.

It was this suggestion that could be partly behind the decision to delay the David Jones vote as any side deal done over Country Road to secure Mr Lew's support for the Woolworths takeover could have legal implications for the bid.

Other theories suggest Mr Lew is out to protect his family's supply contracts into David Jones, with his family interests through Voyager Distribution owning a wide range of fashion labels such as FCUK, Anthea Crawford, Simon de Winter, Kayser and other private label apparel of which many are stocked by David Jones.

Woolworths boss Ian Moir has stated his desire to strip out brands from David Jones' trading floor and replace it with his company's own private label range - potentially locking out Mr Lew's wholesale business from the department store and causing its earnings to dive.

''We expect plenty of theories to swirl around why Solomon Lew has taken a stake,'' said Citi retail analyst Craig Woolford.

''We place a low probability on the deal not proceeding based on the simple logic that Solomon Lew will want to ensure he gains value from the transaction as well.

''It seems a stretch to see Mr Lew invest $200 million in David Jones to simply extract a little more value in his $165 million stake in Country Road.''

The final theory pushed by some analysts is the most cunning and befitting a businessman like Mr Lew.

''What if he wants to use the stake in David Jones to spoil the Woolworths takeover and then tries to resurrect the merger with Myer?'' said one South African analyst.

For Mr Lew, the man who was once the chairman of Coles Myer, only to be ousted from the board more than 10 years ago after a bruising and bitter public campaign, it would be a wonderfully cold dish of revenge served up to those who wronged him, deserted him and thought he was done for.

Getting Woolworths at the same time would just be the icing on the cake.